Here's a Facebook status update from Canadian comic Mae Martin, whose show Slumber Party is at the Edinburgh fringe's Underbelly venue at 5.10pm all month: "Guys. I've been in Edinburgh three days and already spent £200 on food and taxis. As a result, I am offering shiatsu massages throughout the month. (I DID A TWO- YEAR COURSE, OK? IT'S A REAL THING.) £20 an hour."

Welcome to the world of the fringe. As audience members scratch their heads, wondering how they will catch Jenny Eclair, David Baddiel and Omid Djalili, because their shows are on at almost the same time each evening – don't worry, you won't miss George Galloway: he's on at lunchtime! – up-and-coming comedians are trying to work out how to bankroll the most important month of their year. Every shiatsu massage helps.

Fringe veteran Bob Slayer, the absurdist storytelling star of Worldwide Bawbag (called "the ultimate memorable off-fringe experience" by the Scotsman), launched alternative fringe site Heroes of Fringe in 2011. He said: "The fringe is mostly paid for by performers who generally don't make money."

In recent years, "free" shows have gone from being 10% of the fringe's 2,000-plus shows to 25%. And while free shows don't make money, at least they don't lose the performers (much) money. Slayer calculates the average cost of putting on a paid-for show at a 105-capacity venue at around £14,000, once you've paid venue fees and covered minimum ticket sales.

Even among popular acts, the economics is grim. Indeed, some standup comics are so fed up, they're taking a break this year. Comedian Tiernan Douieb is co-founder of London's Phoenix Fringe, at the Phoenix pub near Oxford Circus, which started last night and runs for a week. Acts include Tiffany Stephenson, Alan Davies, Isy Suttie, Mark Watson, Russell Howard and Andi Osho, all on sabbatical from Edinburgh.

"I went to Edinburgh seven years in a row," said Douieb. "It became more and more expensive to do. Audiences don't have as much money, so they either want someone they know or they want it for free. People giving out flyers get asked, 'Is it free? Is he on TV?' It's hard to compete with over 2,000 shows without TV credits. Then you have TV acts selling tickets at £30, taking audiences away from everyone else."

The last straw came two years ago. "I was on a deal where if I sold 100% of my tickets I would have lost £4,500. I sold 75%, so I came away with £6,000 of debt. That is vicious."

There are lots of theories among performers about "when the fringe went wrong". Last year, Stewart Lee blamed profit-obsessed promoters: "Edinburgh in August now threatens to become an oligarchy, a Chipping Norton of the arts."

The most oft-cited "moment of doom" came five years ago when four venues – Pleasance, Underbelly, Gilded Balloon and Assembly – were rebranded as the Edinburgh Comedy Festival, a separate entity to the not-for-profit Edinburgh fringe. Lee argued that punters no longer understood the difference between what they're offering (basically, professional comedy) and "the fringe".

To confuse things further, there are two rival "free" factions: PBH (run by Peter Buckley Hill, the original head of the free fringe) and Laughing Horse, out of which Bob Slayer's Heroes of Fringe grew. Now, in a move to bridge the gap between "free" and "cripplingly-expensive-for-the-comedian" paid-for shows, Heroes is trying a "pay-what-you-want", reserve-in-advance scheme.

Slayer claims this recaptures the spirit of the fringe. If you buy a ticket (recommended donation £5), you get a guaranteed seat. If you take a chance and get in free, you can choose whether to donate at the end. People have loved shows so much they paid twice.

This feels a lot to me like a show with pre-sold tickets. But, so far, audiences are up for it. Last week, Heroes "sold out" four "free" dates before the festival started, including Miss Behave and Phil Kay. Pay-what-you-want has the spirit of online crowd-funding system Kickstarter, and harnesses the "support the fringe" ethos that lots of punters have expressly gone to Edinburgh for.

Full disclosure: I really want Bob's scheme to work. I'm performing in two free Heroes shows – The Night I Died, a chat show about comedians' worst gigs, featuring Scott Capurro and Jo Caulfield, and Upstairs Downton, an improvised period drama spoof, at Heroes of Fringe. And, in a compare-and-contrast experiment, I am performing two nights of my own £8-a-ticket show, I Laughed, I Cried, based on my book about doing 100 gigs in 100 nights, at Funny Women's Pop-Up Fringe at Le Monde. If I make enough money from any of these endeavours to buy a round of drinks, I will be very surprised. Last year, the Olympics and the recession sent ticket sales down 1% for the first time in fringe history. Perhaps the commercial influence has played a role: people know that if you go to Edinburgh, you can see a lot of things that feel close to what you'd see on television. And you have to pay for that. Is this what audiences want? The fact that Sarah Millican was the first show to sell out this year suggests it is.

Does anyone care about performers losing money? Probably not, says Bruce Dessau, critic and editor of website Beyond the Joke: "The fringe is going through a combination of slight reinvention and fragmentation. The only real change I've noticed is the emergence of the free fringe and the increase in the quality of acts doing free shows. I don't think comedy suffers. The fringe has to be good for comedy. This, to be honest, is an argument that critics have. The public just want to enjoy shows."

Oh, well. At least I know where to go for shiatsu when no one turns up.